Debt Management Programme - Should I... Advice

Deep_In_Debt

I'm surprised at GP saying that you can overpay when you want to...that normally opens a can of worms where the creditors are concerned. If you pay more one month, then they expect it every month and that's where the problems start.

You're doing the right thing by contacting CCCS. You'll be debt free sooner than 7 years as you won't be paying fees.

Good luck.

stuartbrookes

Thanks all... I've been totting up my maths and I've already effectively created my own DMP based on figures I think I can reasonably afford. For some creditors, it shows a reduced level whilst for others they'll be getting more than they currently do. I'm hoping that will help the CCCS.

It shows creditor, outstanding amount, current payment and proposed payment with a 5 year DMP.

Creditor Outstanding Current 60 months
Tesco £18,000.00 £480.31 £300.00
Egg £8,515.01 £196.00 £141.92
MBNA £7,245.00 £100.00 £120.75
Barclays OD£5,000.00 £45.00 £83.33
HSBC OD £1,405.00 £22.32 £23.42
Barclays OD£1,000.00 £2.00 £16.67
Barclays OD£1,300.00 £8.00 £21.67
Next £1,026.57 £149.53 £17.11
Sofa £1,500.00 £43.29 £25.00
£44,991.58 £1,046.45 £749.86

That proposal above is affordable for me. I know it won't be a problem doing those repayments.

Regarding the overpayments, I get an annual bonus at work and I wanted to use a chunk of that to make over-payments annually, GP thought this would be fine if it was explained as a bonus payment.

SnV, you did your own DMP, is the above basis how you went about it?

stuartbrookes

Actually, I did have a 2nd idea... Can I do a DMP for selected bits only, i.e. ignore all my overdrafts as I can 'live with those for the time being'

But if I did a DPM on the Loans, CC and StoreCard, thats £35k, which over 4 years is £725/month, again affordable as they're currently costing us £925 for those alone. So Tesco get there payment back 'on time minus interest', Egg get it back 1 year early minus interest, MBNA and Next get theirs back in an agreed timeframe without interest. That sounds a decent alternative to me.

So I'm giving CCCS multiple options that I can stick with.

Sorry for posting these, its just good to get other opinions as I don't want to worry the other half as she suffers from anxiety as it is.

barbiedoll

I hope that you're aware of the regulations regarding credit card "rate jacking"? MBNA are notorious for hiking the interest rates on their credit cards. (As if their rates weren't high enough :mad:)

If they send a letter informing you that the interest rate is going to rise, you are entitled to refuse it and although it means that they will "close" your account, i.e you won't be able to use your card anymore, they can't ask for more than the minimum payment and you will be able to pay it off as you are already doing. And if you're on a DMP, you really don't want to be spending any more on your card anyway. See Martin's article here..

http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases

Good luck with your DMP, let us know how you get on!

saltnvinegar

stuartbrookes wrote: »

Actually, I did have a 2nd idea... Can I do a DMP for selected bits only, i.e. ignore all my overdrafts as I can 'live with those for the time being'

Hiya

You can but its not advised (and CCCS would not advise this either I'm sure)

The purpose of a DMP is that you treat all your creditors in a fair manner. If you pay one creditor in preference to another then you lose a major leverage point that you have especially if they are harrassing you or refusing to accept your DMP.

If you show favour to any of your creditors the others will put pressure on you to be those 'favoured' ones. Make sense?

Also if it were to go to court it would not look so good on you if you weren't treating all your creditors fairly with the same offer.

Regards your payments they need to be calculated on a prorata rate based on their % of your overall debt.

So your overall debt it £44.250 therefore Tesco would receive 40.68% of your monthly payment. So if you could afford £500 a month the payment to tesco would be £203.39

Hope that makes sense?

Your creditors have no legal right to see your prorata calculations on whats going to your other creditors and its up to you whether you sent them this info or not.

However I chose to do this so my creditors could see who else I owed money to and they could see they were being treated fairly.

They will know some of this information anyway - they will check your credit file to make sure you aren't telling porkies and to see who you really owe money too!!

Best to start off on the moral high ground in my view so it only makes it more difficult for them to be unreasonable.

Best

SnV

MrsTinks

Ok a few points to pick up on...

Some of those debts - the sofa springs to mind - are they secured? If they are then they may need to be looked at seperately.

The debts that are joint or in your partners name... are you doing a joint DMP? or 2 individual ones? Because with the joint name debt then If you do not pay they will chase HER... BOTH your credit ratings will get hammered. Which as you have run up the debt together is fair enough, but something for you to bear in mind!

None of your creditors HAVE to freeze interest - all may apply for CCJs but so long as you are paying all you can then any CCJ if you defend it is only likely to be for as much as you are already paying. They may go for a charging order on the house which means that should you sell the house then any debt you still owe would be paid from any profit on the house before the rest of the money is released to you.

Have you thought about posting up your SOA on here so we can take a look at it and see where you're at and if there are any solutions that may help you get to a point of snowballing instead of going for a DMP?

And yes - you need to include ALL debts in a DMP - otherwise your creditors are going to be more than a little miffed and less likely to play nice... Before you start a DMP you should open a basic bank account with a bank you have no debts with so that they can't grab any income under the rules of offset...

stuartbrookes

Okay, I've been looking at it and was going to scrap that 'reduced' DMP package anyway, so thanks for the advice. None of the items are secured, the two loans are unsecured loans and the sofa payment is technically a loan from GE Money (Santander).

What is an SOA that you talk about me posting?

The figures above for repayments are all pro-rata'd, I guessed that was the only fair way to work it, however it still means some get more than they're getting today and others (Tesco, Egg, Next, DFS) lose out slightly, but its still a firm commitment to pay them back. I think Tesco's are my sticking barrier as that loan is only 3 months old.

However, should any of them not freeze interest, then thats a different discussion entirely as it stuffs my plans up completely and I don't want to go down the CCJ route.

Out of interest, if one of the creditors refuse to accept any DMP. Is it possible to scrap the whole DMP and just struggle on or once I start it, is that it?

Oh, and we're going to do a join DMP for the record as well.

Mike_A_2

The SOA is a statement of your incoming and outgoings.

i.e Your wages, bonuses, benefits
and then your bills, Mortgage, council tax, food, utilities etc.

Then you would list your creditors and the balances of your loans / c.cards etc

This then shows you what disposable income you have left each month to use on paying your debts.

Regards,
Mike

Mike_A_2

stuartbrookes wrote: »

Out of interest, if one of the creditors refuse to accept any DMP. Is it possible to scrap the whole DMP and just struggle on or once I start it, is that it?

This could be a problem because when you tell your creditors that you are in difficulties then they could withdraw your overdrafts etc and if you then pull out of the DMP, they are almost certainly not going to give you the limits back after knowing your circumstances.

Once you take the step, you need to commit to it really.

You should also open up a new basic bank account ready to switch to.

Mike

Loubylou2

Hi
Just want to say you are definitely doing the right thing. I'm also interested in all the answers to your questions but I have learnt that creditors act in differet ways with different clients. In other words you just have to get going and slowly it will sort itself out. We are three months in to our DMP have three creditors ( large amounts) and so far two have accepted the DMP with one pending.

I am still worrying about the worst case scenario eg CCJ's charging orders etc- thats in my nature but you will get plenty of reassurance on these forums as things move along.
One thing that happened to us is that when Tesco submitted their 'outstanding balance' to Payplan it does include all the interest :eek:which means that in our case thay get more than another creditor who didn't add the interest. Apparently that happens. But as I said it may be different for you.
Good luck on your journey and I am sure you won't regret it.:)